Brooklyn Church Conversion Heads to Auction After Two Failed Developments

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A Brooklyn church is heading to auction next month after two developers failed to redevelop the site and one was forced to file for bankruptcy.

The former St. Luke’s Evangelical Lutheran Church, at 257 Washington Avenue in Brooklyn’s Clinton Hill neighborhood, will be open for bidding on Sept. 24, Crain’s New York Business first reported. Bidders must register by Sept. 20 and deals will require approval of the U.S. Bankruptcy Court of the Eastern District.

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Developers will be able to bid on approximately 32,000 buildable square feet for the opportunity to “redevelop within the existing envelope of the current structures into a residential asset,” according to Raven Property Advisors, which is marketing the auction.

“The asset is a very unique block-through redevelopment opportunity within the Clinton Hill Historic District, and undoubtedly will soon be transformed into something beautiful, while still maintaining its character,” Raven CEO Rich Velotta said in a statement to Commercial Observer.

The first developer to take a crack at the church conversion was Brookland Capital, which purchased the former church site for $8.8 million in 2015 and had plans to convert it into a residential condominium with eight units, CO reported at the time.

Brookland ran into financial difficulties building on the landmarked property and was forced to sell it for $13.5 million in 2019 to Brooklyn developer Serabjit Singh Malhotra. Malhotra ran into similar financial obstacles following the pandemic and filed bankruptcy papers in May after the property went into foreclosure, The Real Deal reported.

Velotta declined to comment on previous developers’ attempts at the project.

Ahead of the auction next month, another Brooklyn developer, Orange Management, has teamed with Geneva Transatlantic Holdings to offer $9 million for the site, according to Crain’s. While the judge in the bankruptcy case is apparently looking for a higher offer, Orange could win the auction if no other bids come in.

The 145-year-old St. Luke’s church closed in 2014 as it faced major repair costs and a shrinking congregation, CO previously reported. The property is composed of one tax lot and is located across the street from the Pratt Institute.

And it’s not the only church sale happening in New York City. In East Harlem, the Archdiocese of New York plans to sell the historic Holy Rosary Church on East 119th Street to Kahen Development Group for $5 million, Gothamist reported this month.

The sale, which is pending approval from Manhattan Supreme Court, would see Kahen acquire 4,930 buildable square feet.

And in the East Village, developer Spatial Equity and nonprofit developer Community Access signed a deal with the Archdiocese in June for between $58 million and $68 million to convert a vacant 1.4-acre lot at 181 Avenue D into a 570-unit multifamily property.

Isabelle Durso can be reached at idurso@commercialobserver.com.